Making Tax Digital – are you ready for HMRC’s digital self assessments?
Despite delays, HMRC’s plans for digital self assessment tax returns are scheduled to come into force in April 2024. From this date, individuals with property or trading income which together create £10,000 turnover or more, will need to submit quarterly, digital returns to HMRC and an annual year end report.
This may seem like a long way away but in practical terms however, the transition from using manual records to recording your property or other business income using approved accounting software, does involve a change to habits and a range of new skills to learn. Many of our clients have moved or are transitioning over to cloud solutions in preparation for when they have to.
Making Tax Digital (MTD) for income tax self assessment at a glance:
- Under MTD it is proposed that the self assessment tax return will be replaced by five new reporting obligations made during and after the tax year
- There will be quarterly updates required and a final year end declaration
- Non UK resident or domiciled individuals will have to follow MTD where they have UK self employment and/or UK property and meet the turnover threshold
- UK residents will have to follow MTD if they have foreign property income that meets the threshold (may be combined with other self employment or UK property turnover)
- Digital records of all transactions will be needed. These will form the basis of the quarterly updates
- Any tax liability will need to be paid by 31 January of the next year (as is currently the case)
- You will be allowed to voluntarily pay your taxes as you go, the detail is still being decided
- Eventually, it is possible that you will be required to make four payments per year on account of tax
What equipment and software will I need?
You will need to become comfortable with new software and will need some form of equipment to run it. It is possible to do this all from your phone but a tablet or computer may be easier.
There are many software options that you can choose from; these include Xero, Sage and Kashflow and your Swindells’ partner can help you to understand which option would be best for your situation.
After much investigation we have chosen to partner with QuickBooks to provide an online accounting solution for our clients.
The Swindells/QuickBooks offering
With QuickBooks you can manage your accounts from anywhere, while reducing time spent on administration. Swindells has partnered with QuickBooks to provide our clients with a simple, cost effective solution to accounting. We can support other software suppliers like Xero and Kashflow as well.
For more information on our cloud accounting packages please visit the link below
Our clients that are already using online or cloud accounting software
Many of our clients are moving over to cloud solutions in preparation for when they have to. Read about The Uckfield Garage’s experience in one of our case studies below:
Now that the start date and the detailed rules have been entered in law, you now have the certainty needed to start planning for these significant changes. We can help you to move your accounts online and make sure you’re ready for.
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